At the top end of the office market, vacancy in Class A buildings ended the quarter at 5.4 percent, a significant decrease of 70 basis points from the prior quarter primarily due to the Gavilon and Nebraska Wesleyan transactions. In the suburban market, the overall vacancy in Class A buildings is an incredibly low 4.6 percent; down 30 basis points from the prior quarter. To put this in perspective, for the second quarter in a row there are currently only five non-medical buildings in the suburban office market which have 10,000 square feet or greater available today. In addition, vacancy rates in Class B buildings in the suburban office market increased slightly to 15.5 percent from 15.3 percent in the prior quarter, and the vacancy rate for Class C buildings decreased to 20.5 percent from 21.7 percent, a 120 basis point decrease primarily due to the leases at 127th & “I” Street.

The CBD market continued to perform well with 140,366 square feet of net absorption due primarily to completion of Gavilon’s building, resulting in a 9.8 percent vacancy for the CBD, a decrease of 60 basis points from the prior quarter.

At the top end of the office market, vacancy in Class A buildings ended the quarter at a vacancy rate of 4.3 percent, a significant decrease of another 110 basis points after a 70 basis point reduction in the fourth quarter of 2013. In the suburban market, the overall vacancy in Class A buildings is an exceedingly low 3.6 percent; down 100 basis points from the prior quarter. To put this in perspective, for the third quarter in a row there are only five Class A non-medical buildings in the suburban office market which have 10,000 square feet or greater available today. As impressive, vacancy rates in Class B buildings in the suburban office market decreased to 14.0 percent from 15.7 percent in the prior quarter. The vacancy rate for Class C buildings decreased slightly to 20.6 percent from 20.8 percent.

The CBD market continued to perform well with 44,734 square feet of net absorption due primarily to the Union Pacific and Regus transactions, resulting in an 8.6 percent vacancy rate in the CBD, a decrease of 90 basis points from the prior quarter.

This year will be a big one with even more office space well on the way along West Dodge and two major projects to finish this year in Midtown. Think and PacLife are in the midtown market according to the breakdowns. Those two could get the Midtown numbers close to 10%, that market will almost certainly have the most absorption this year.

daveoma wrote:Great news for the city! Perhaps the relatively low vacancy rate will spur the construction of new office buildings downtown.

We will see. I wish there was a little more trust in the market to get spec space built, right now nothing moves forward without a major tenant committed. Westroads Office Park building 4 was one of the few pure spec builds recently and is already 94% full.

and 2 more than are in the very early stagesHighline 2.0Burlington Postal Annex

Obviously not all of these are huge projects or in the CBD.. but for the size of Omaha and the slow but steady population and job growth here, I'd say there's a lot of really good infill and plenty to watch! Still have my fingers crossed for the big time projects like Shamrock, Lanoha, and Tetrad, not to mention see some action on all of those empty lots near midtown crossing, but I'm still feeling pretty good about the development that's going on. Fun to watch!

Given today's article about ConAgra's start to their moveout to Chicago, it got me thinking about downtown office space, vacancies, and all of the proposed projects.

Even if a major new tenant (like HDR, or someone of that size) comes downtown, aren't we already a bit saturated, nevermind all of the proposed new projects that also include some sort of office component?

What does this mean for occupancy rates? What about delays in getting proposed structures built? Clearly banks will take all of this into account when underwriting loans on these projects... Doesn't feel good about much of the proposed stuff getting built anytime in the near future, without firm commitments from a major tenant, which will be hard to come by.

Ben wrote:Given today's article about ConAgra's start to their moveout to Chicago, it got me thinking about downtown office space, vacancies, and all of the proposed projects.

Even if a major new tenant (like HDR, or someone of that size) comes downtown, aren't we already a bit saturated, nevermind all of the proposed new projects that also include some sort of office component?

What does this mean for occupancy rates? What about delays in getting proposed structures built? Clearly banks will take all of this into account when underwriting loans on these projects... Doesn't feel good about much of the proposed stuff getting built anytime in the near future, without firm commitments from a major tenant, which will be hard to come by.

I agree. I wonder about the Capitol District office space being built. I can see that being put on hold indefinitely.

According to this report the CBD has a vacancy rate of 8.4% which is pretty strong. Says CPP added over 12K SF of office users with DTO absorbing over 33K total. It looks like Landmark had a strong user move in that took almost 20K SF in Q1 as well.

DTO has new office builds like Alvine and Boyd Jones that will help the vacancy rate.

Overall yes there will be work to do with ConAgra's openings, but think people don't really realize that the majority of deals aren't the 300K SF HDRs, but the smaller transactions by companies most of us have never heard of.

I will agree that spec space seems not terribly likely, which is too bad. I think some spec space would do well DT. Lots of users don't want whole blocks of floors, but would like a floor to occupy. Kind of a catch 22 where open space is attractive to users b/c it offers flexibility and options, but then that hurts the lending market.

I would love to see some of those buildings razed and 4-6 story mixed used buildings in their place. Also would love to see the street grid return to normal down there, it could be a whole new extension of the Old Market.

Sadly, it is good quality office space available for lease. Definitely not the repurposing we hope for, but occupancy affects the whole of downtown/midtown and if this space isn't available, maybe that will spur another company to find an innovative downtown solution.

skinzfan23 wrote:I would love to see some of those buildings razed and 4-6 story mixed used buildings in their place. Also would love to see the street grid return to normal down there, it could be a whole new extension of the Old Market.

skinzfan23 wrote:I would love to see some of those buildings razed and 4-6 story mixed used buildings in their place. Also would love to see the street grid return to normal down there, it could be a whole new extension of the Old Market.

I like the idea of an Old Market extension. It could be a canyon of sorts, perhaps for jobbers.

CBD having a nice bounce back from ConAgra. 58K SF absorbed this quarter and 112K SF YTD absorption. According to the report the CBD was as low as 7.9% vacancy, bounced up to 15.5% with the job losses and is trending back down at 12.7% now.

iamjacobm wrote:CBD having a nice bounce back from ConAgra. 58K SF absorbed this quarter and 112K SF YTD absorption. According to the report the CBD was as low as 7.9% vacancy, bounced up to 15.5% with the job losses and is trending back down at 12.7% now.

The Omaha Office Market experienced positive absorption for a fourth consecutive quarter and six out of the last seven quarters. The total absorption for the third quarter of 2017 was 68,122 square feet and 225,985 square feet for the year-to-date. Average annual absorption over the last ten years is approximately 250,000 square feet annually and year-to-date absorption is tracking accordingly. The positive absorption in the quarter impacted the vacancy rate resulting in a decrease of 30 basis points bringing the overall vacancy rate to 10.6 percent; the lowest rate in the past 18 years.

For the second quarter in a row, the leasing highlight in the Omaha office market was the Downtown submarket with positive absorption of 46,165 square feet. The Downtown submarket vacancy rate has been on quite a rollercoaster ride the past few years rising from a low 7.9 percent vacancy rate at the end of 2015 to a high vacancy rate of 15.5 percent in 2016. With the positive absorption this quarter, the Downtown submarket’s vacancy rate is now at 11.7 percent, a 100 basis point decrease from the prior quarter and a 220 basis point decrease year-to-date.

Just out of curiosity I went back through previous Colliers office reports. They only go back to 2015, but in the reports available the CBD total office stock peaked at 4,841,639 SF in Q4 of 2015 and is currently 4,577,737 SF. That is a reduction of almost 264K SF. Almost surely a result of office space being converted to residential or any demolitions that have happened.

While those numbers will affect the vacancy rate they are not included in the positive absorption numbers. Still good news that office users are moving into the sub-market.